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The greatest decline in planned investments was for pipelines, according to the data provided by a C.D. Howe Institute study.Photo: Canadian Press

Arthur White-Crummey, Regina Leader-Post

Published: February 22, 2019 - 8:00 AM

Those taking aim at proposed federal changes to environmental assessments for major resource projects just got new ammunition, after a Canadian think tank released a report warning of “fundamental problems” in Bill C-69.

The bill, which would overhaul the process for approving pipelines, mines and oil and gas extraction projects, is now winding its way through the Senate. Critics have referred to it as the “anti-pipeline bill” and pushed senators to reverse what they say are new hurdles for already-strained development in the sector.

On Thursday, a study from the C.D. Howe Institute warned that the bill “looks likely to worsen Canada’s present disease.”

The “disease” is one of plummeting investment, according to the study. It found that planned investment in major resource projects has “plunged” by roughly $100 billion between 2017 and 2018. Over that time, 37 projects worth $77 billion were cancelled. The greatest proportional decline in planned investments was for pipelines, according to the data provided.

Annual capital spending in energy projects was down $50 billion in 2018, compared with figures from a peak in 2014. That came during a global downturn, but fell more steeply that elsewhere.

But Natural Resources Canada countered that the Liberal government inherited a “broken system” from the Conservatives. An email from the press secretary to Minister Amarjeet Sohi said that the government has “delivered” for the energy sector, pointing to the recently approved LNG Canada project in B.C. as a notable example.

“We are making the process more predictable and timely through early, inclusive and meaningful public engagement; partnerships with Indigenous peoples and timely decisions based on the best available science and Indigenous knowledge,” Vanessa Adams stated.

“These are necessary changes that will give investors the certainty they need, while delivering a process Canadians can trust.”

She said the existing legislation, enacted in 2012 under the Conservative government, “failed to meet the needs of resource industries.” According to Adams, the C.D. Howe study backs that up. The research pointed to years-long delays that exceed those in competing countries, notably Australia and the United States.

But the study’s authors believe the new legislation won’t solve the underlying problems. While Bill C-69 includes timelines to ensure projects get done faster, the study calls them “aspirational.”

With more factors to consider, and potentially thousands of interveners welcome at the table, they call the proposed approval framework a recipe for even more gridlock. It risks “significantly prolonging the assessment process,” they warned, potentially causing a further hit to investment.

“The federal government’s proposed Bill C-69 could further discourage investment in the sector by congesting the assessment process with wider public policy concerns and exacerbating the political uncertainty,” the study says.

It also warns of increased “politicization” in the new process. Previously, only projects found to have significant environmental impacts came to the minister for final approval. Under the proposed changes, politicians would have the final say on almost any project, according to the institute’s reading of the bill.

“The new regime could substantially increase political risk for proposed projects,” it says.

The bill would replace the National Energy Board with a Canadian Energy Regulator. The new body would be required to take additional factors into account, including contributions to sustainability, impacts on climate change and “the intersection of sex and gender with other identity factors.”

According to the new study, those factors are “poorly defined” and would lead to more uncertainty. It reserved special criticism for the proposed need to consider a broad issue like climate change for each individual project.

Currently, hearings only include a limited number of experts and affected groups. But the bill calls for wider public consultation, prompting the study to warn that thousands of parties could show up.

“The proposed IAA risks review panel hearings morphing into forums for wide-ranging debates on broader public policy issues between parties with political aims,” it says, adding that could lead to more delays and increased costs.

Both bear directly on investment decisions, the study notes.

Adams framed the data cited in the study differently, especially on projects planned for the future.

“With over half a trillion dollars in proposed private sector investments over the next 10 years, Canadians know better rules are needed to make sure good projects move ahead and create good, middle-class jobs,” she said.

Environmentalists also have good things to say about the Bill. Ian Bruce, director of science and policy for the David Suzuki Foundation, told the Leader-Post that it will help “restore public trust in the environmental impact assessment process.”

“Previously, the Canadian government rubber-stamped economic development projects, yet even with approvals, no pipelines were built. Canadians had lost trust in the process and key voices — Indigenous voices and others — were excluded,” he said in an emailed statement.

“Bill C-69 seeks to hear all the facts from all sides, an important consideration for the environment and economic development. The current environmental assessment process is clearly falling short. We need an alternative like Bill C-69.”